Bank of Baroda Ltd (NSE: BANKBARODA) Q3 2025 Earnings Call dated Jan. 30, 2025
Corporate Participants:
Debadatta Chand — Managing Director and Chief Executive Officer
Manoj Chayani — Chief Financial Officer
Lal Singh — Executive Director
Lalit Tyagi — Executive Director
Sanjay Mudaliar — Executive Director
Beena Vaheed — Executive Director
Analysts:
Unidentified Participant
Presentation:
Operator
Good evening, everyone, and welcome to the Analyst Meet for Bank of Results for the quarter ended 31st December 2024. Thank you all for joining us. We have with us today our MD and CEO, Chand. He is joined by the Bank’s Executive Directors and the CFO. We have a short presentation — we have a short presentation that we will take you through, followed by the Q&A session.
Request Chancellor to please speak forward.
Debadatta Chand — Managing Director and Chief Executive Officer
Yes. Thanks, Feroza. Again, good evening to all on call. So let me introduce the management team. I’m the — I’m Dee Chan, I’m the MD and CEO of Bank of and interacting with all of you for many quarters now. With me, Mr. Lalit Thiagi is a Executive director. He looks after the corporate credit, the International banking and also treasury for the bank. With us again Mr. Sanjay Mudaliar, he is a Executive Director looking after the entire IT operation of the bank and including the retail asset of the bank. And with us, Mr. Lal Singh is Executive Director looking after the recovery of the agri and MSA vertical and also the HR function of the bank. And again with us the management team, Madam, Beena Vaheed, she is Executive Director looking after all control, compliance function and including the retail liability of the bank.
With all of us again, the CFO of the bank, Mr. Manoj c and is interacting with you for maybe two, three quarters now. So with this, Chayani, over to you for your presentation. And thereafter I’ll go for the my opening remarks.
Operator
Yeah, you’re on mute.
Debadatta Chand — Managing Director and Chief Executive Officer
Any you are on mute?
Manoj Chayani — Chief Financial Officer
Good evening everyone and as you know it’s always a privilege to interact with you and we are ready with our financial highlights of Bank of Boroda for the quarter ended nine months ended 31st December 2024. Since we are meeting in the new way for the first time, we see you all and your family member a very happy New Year 2025.
Coming to the financial highlights, the Bank has posted financial total business volume of INR25.65 lakh crores as of 31st December 2024. If you look at the advances side, the global advances has grown by 11.8%, which consists of domestic advance of 11.9% Y-on-Y growth and international 11.2%. Segment-wise, if we analyze, we continue to grow earth our retail, it’s an organic growth of around 20%. Agriculture is growing at 13%, MSME at 14%, which is better than the previous quarters, corporate at 7%. And if we look at the retail — the system, we have seen a smart growth of around 16.3% in mortgage, 16.6% at-home loan, education at 17%, offer loan at 21% and personal loan continuously we are moderating the growth. And as of December, we have grown at 24%.
Deposit remains a constant for the banking industry at a large. However, the bank has grown deposit at 11.8% Y-on-Y with a CD ratio is a little elevated to 84.24%. But the two noticeable aspect is that both our CASA has grown Y-on-Y of 6.5%, which is better than the peer banks and we could maintain our CASA ratio around 40% as per our guidance. Bank enjoys a robust profitability and we have posted operating profit of INR7,664 for the quarter with 9.3% Y-on-Y growth. And continuously, we are posting a profit after-tax more than INR4,000 crores. And this quarter also we have posted a profit after-tax of INR4,837 crores with a Y-o-Y growth of 5.6%.
A return on asset continuously the Bank has posted for the tenth quarter of more than 1% as against our guidance of more than of the — and return on asset is 1.15. And similarly, there is a robust return on equity of 17% as of 31st December 2024. If we look at the nine months period, operating profit has grown by 6.3%, profit after-tax 12.6%, return on asset has improved from 1.15% to 1.7% and return on equity, as we said, it is 17.03%. Yield on R1 says nine months ended, it has grown from 8.44% to 8.46%. However, there is a increase in the cost of deposit from 4.85 to 5.09. As a result of this, the net interest margin for the nine months has come a little bit from 3.14 to 3.08. However, this is both as for our guidance, lower band of the guidance of 3.15 plus minus 5 bps, that is 3.10 to 3.20.
Bank enjoys a robust asset quality, healthy asset quality with gross NPA trending at 2.43, which has reduced by 65 bps Y-on-Y. Similarly, net NPA also reduced from 0.70 to 0.59 and provision coverage ratio is robust at 93.51%. One of the key parameter is that slippage ratio, slippage ratio we could improve to 0.90 against our guidance of 1 to 1.25 and we enjoy a very healthy credit cost of 0.30, which has again improved from 0.39.
If we look at nine months period, the slippage ratio has come to 0.81 and credit cost is 0.47. SMA book now as against September of 0.47, it is 0.49, it is at a similar level and we enjoy a healthy collection efficiency of 99%. Also, we are having a robust capital base of CRAR trending at 15.96%. This is excluding the profit for the current year, if we include that, then the CRA has improved further to 17.34% and the CET1 of 12.38% as of December will improve to 13.77%.
That’s all from my side. Chand sir, over to you.
Debadatta Chand — Managing Director and Chief Executive Officer
Yeah. Thank you, Chayani ji. And once again, good evening to all of you. And as the CFO said, Happy New Year to you, you all your team members. And let me make some of the quality comments over and above the presentation made by the CFO. And if we look at the numbers that we have announced for this quarter, this is again consistent to the numbers we have announced in the earlier quarters. So the point here is that we are looking at a very sustainable business model wherein the growth in book, the growth in profit are something strong, robust and consistent.
On the growth has been said, as against a 9% to 11% deposit guidance and 11% to 13% advanced guidance. Our deposit growth is 11.8% and the advanced growth is 11.8%. This is one quarter where the growth of advance is almost equal to the growth of deposit. As you know, the quarter also has a, I mean, underlying market condition of a tight liquidity and also a tight deposit market, wherein there are still elevated cost structure on the deposit side.
We also said earlier one of the concept of slightly utilizing the bank’s book more. And typically we call it a RAM and the corporate RAM is the retail agri and MSME. If you look at the percentage of RAM in December ’24 over December ’23, it has improved 200 bps from 57.9% to 59.9%. As the retail continued to grow at 20% quarter-to-quarter for many quarters now.
On the agri and MSME as compared to the September, we added almost 200 bps growth in December over September on the percentage of growth in agri and MSME is almost 2% higher than the growth that Y-o-Y growth we had in September. So we’ll continue to focus on the utilization story and would work on making a diversified book so that we have a margin accretive measures so that we improve the margin and the profitability going forward. At the same time, the higher diversified book and a lower RWA density book, right?
On the CASA front, a noticeable thing that as the CFO said, our growth is 6.5% this quarter. And again, just to remind that our growth in September was 7%. And earlier also we said that we continue to focus on the retail side of the CASA and also on the retail term by innovating product in the market, trying to improve our service standard, adapting more and more digital part of the entire journey. So that’s significantly giving us positive outcome. And both the quarters, the growth has been all you know, the system growth on the CASA front and we are very satisfyingly placed at a growth of 7% in September and 6.5% in December.
The growth in operating profit, the key focus of the bank is how do you again structured the operating profit as the core theme of optimizing that. If you look at the growth this time, the operating income growth is 9.2% and the operating expense growth is contained at 9.1%, the operating profit growth is 9.3%. And the net profit for this quarter is 5.6%, whereas the nine months is 12.6%. So considering that the measure of profit metrics of the bank is quite strong, robust, sustainable and we’re working to maintain also going forward.
On the margin side, we guided the market 3.15 plus minus 5 bps. Let us also make one accounting change that happened also during the year. There was a change in accounting from panel interest and panel charges. So that impact is almost 5 bps to 6 bps lower. With that also, the bank would achieve a nine months 3.08% margin, which is slightly lower than the lower band of our guidance earlier. So going forward, our operating guidance for the margin for the full-year is 3.10, that means 3.05 plus minus 5 bps with upside — upward because of the change condition that you are looking at for this quarter, particularly on the liquidity side and also on the rate expectation on the monetary policy that we have going to be.
So that continue to be something that we are quite mindful how to operate at a margin guidance, which again are coming on the strong side, the book is calibrated keeping the margin and the ROA guidance. So in that way, you would have seen our growth is strong and robust for this quarter too. Asset quality, as the CFO said right, the GNPA net NPA trending downwards. The slippage cost and the credit cost has been much slower than the guidance we had given, but we’ll continue to retain the guidance at the same level.
On the digital, again, we’re working. Recently, there was an IBA digital company wherein the bank could win our owners in two segment of the digital technology awards and also a runner up in two. So continue to be digital as a key focus on the business model that we have and continue to have.
To sum up on the guidance, we keep the deposit guidance the same at 9% to 11% on the advanced guidance continued to be 11% to 13% and the slippage ratio continue to be 1% to 1.25%. The credit cost continue to be the guidance of less than 0.75%. The margin guidance is 3% to 3.10%, that is 3.05 plus minus 5 bps with a condition that we think can come can be a positively upward also, which can typically take us to the upper of the guidance, which would be the lower of the guidance earlier. And in spite of the fact that the panel interest panel charges impact is almost 5 bps to 6 bps for the full-year.
With this, again, thank all of you for joining on the call and open for question and-answer. Over to you, operator.
Questions and Answers:
Operator
Thank you, sir. The first question is from Rikin Shah.
Unidentified Participant
Hi, am I audible?
Operator
Yes, Rikin.
Debadatta Chand
Yeah, Rikin. Please go ahead. Yeah.
Unidentified Participant
Thank you, sir. Good evening for the opportunity. And just a few questions. The first one is on margins. The domestic advance yield has declined again very sharply in this quarter. And what explains that because the corporate loan growth has also kind of slowed down versus the last quarter run rate? And in your opening remarks, you mentioned that there could be an upside risk to our margin guidance of 3.05%, which is the midpoint. How would that really kind of come through? Because if the rates are cut, while of course, your MCLR book is higher, why would that be an upside risk to your guidance? So that’s my question number one.
The second question is on asset quality. The personal loan GNPA ratio in the last few quarters has been rising and despite that, we have seen almost 7% Q-o-Q PL growth in this quarter. So what’s the thought process there? Of course, your retail slippages have moved down, so that’s a bit more comforting. And the second part of the NPA would be gold NPAs, even they have slightly moved up, of course, from a very low base. Any color you would be able to share on that? So that’s my second question.
Thirdly, it is on SMAs. Last quarter, of course, we had called out a couple of accounts because of which it was elevated. They have — they seem not to have been rolled back. Do you expect them to see a rollback in the coming quarter?
And lastly, your slippage credit cost guidance, you’re kind of holding it up despite your nine month performance reasonably below that. So anything to read into it? Do you expect any kind of further deterioration or should we expect the current run rate to kind of maintain? Those are my four questions. And just two data keeping questions like always, the total number of employees and standard restructured account, that would be helpful. Thank you, sir.
Debadatta Chand
Thanks. Rikin, actually on the margin side, there is no upside what I said the upside bias. So when I say 3% to 3.10%, what I’m telling is that we try to have an upside bias, let me so try to achieve 3.10, not a risk to that, right? So that’s a clarification I want to give point one.
On the personal loan, you are right, actually if you look at the GNPA that we announced for the personal loan, the book is small, let’s say, INR32,000 crores and the GNPA for December and September, there is almost a 0.5% increase on the GNPA. In terms of amount, it translates to a INR100 crore per quarter. My first for the full quarter is INR2,500 crores, that’s insignificant in that way. And you rightly said that because other segment of the retail is much lower behind slippage, so this getting adjusted actually in that manner. So there is no concern per se.
Actually, the quality of the book have improved significantly when we stated a 1.5 year back that we’re going to moderate on the growth in the process actually we improved the underwriting standard. So there is no concern. Similarly gold loan, if you take the absolute amount in terms of the 0.71 to 0.80, the amount translates to INR36 crore. So that also insignificant in that way. So the normal slippage guidance is INR2,50 crore INR100 crore normalized basis for quarter-to-quarter and that continue to hold on that.
You also talked about SMA book rollback, yes, there is a — already actually we rolled back– Lal Singh sir, can you just throw some light on this the SMA book at 0.49?
Lal Singh
So SMA book is including restructured around INR28,400, which is 2.48% of the total loan book.
Debadatta Chand
Rikin, just to add to what Lal Singh sir said, actually slightly you are looking at 0.49 to some 0.45 in the last quarter, right? And that is higher than the 0.23 earlier. So couple of accounts, 4, 5 accounts which was there, which was more of a technical or the — I mean, what if I say temporary equity mismatch, out of that three already pulled back as on today. So if I look at the SMA that we have declared, actually it is not 0.9%, now it is 0.19 because all these accounts have been pulled back by this time. So there is no concern with regard to the SME in that.
Unidentified Participant
Yeah, thank you.
Operator
We go ahead just one, can you please limit yourself to two questions per person and we’ll come back to you at this time. The next question is a question from Rakesh Kumar.
Unidentified Participant
Hi, hi, hi, sir. Can you hear me?
Debadatta Chand
I can hear you. Please go ahead.
Unidentified Participant
Yes, sir. So just coming back to this margin number and the credit yield number. So we had a sharp fall in the recovery on the written-off number. And if I look at recovery coming from NPA, that number is broadly similar. There is not much of a change on a sequential basis. So what I think that your recovery number on the written-off book has kind of you like dented your margin number. So firstly, what is the recovery on written-off number is going to be for fourth quarter and going ahead? And is the recovery number — the interest income accrual number going into the interest income line, was that number INR300 crores to INR350 crores that we lost this quarter, are we growth?
Debadatta Chand
No, actually just to clarify, last quarter, the recovery from written-off, there was a one-off, which you also clarified last-time. And because of that, the amount got boosted. Our normalized run rate for recovery out of written-off is almost INR750 crores to INR800 crores. And if you look at Q3 of December ’23 also, it was almost at the same level. This quarter is almost at the same level. And going forward, we’ll maintain the normalized. There may be a possibility of one-off in couple of quarters, but that would be add on to that.
So the fall in the recovery in return of vis-a-vis the last quarter, I’m talking the Q2 — Q3 over Q2, it is also supported this time by the higher treasury income and also one tax element of the interest on the tax reform. So that clearly negative bit of the fall in that manner. So in that way, the bank’s book is well balanced in terms of taking any impact because of the recovery or account. Last quarter it was one-off otherwise the normal rate is the level that we have disclosed. I mean this quarter the number is.
Unidentified Participant
Just to know that what is the interest income approval that we would have done in second quarter because of the recoveries, NPA recovery and TW recoveries, what that number was?
Debadatta Chand
I think we’ll update you roughly around out of that, it can be INR500 crores, INR600 crore, that is what actually there was a one-off. So obviously, there was a interest income written back on the matter. So I mean on the interest income, on the impact suppose because of one-off is not there this quarter, almost to the extent of like INR300 crore, INR350 crore kind of income.
Unidentified Participant
Impact is there, correct. So that is what I was estimating that INR300 crores to INR350 crore is the impact that we have this quarter.
Debadatta Chand
Yeah.
Unidentified Participant
And secondly, sir, fee income, sir, fee income is pretty strong and asset quality is also pretty strong. So on fee income, if you can highlight some of the things that why it happened, what are we doing and why did we achieve this kind of a strong number on core fee income, sir?
Debadatta Chand
Yeah. So you’re very right actually earlier also we announced that we started a — some kind of internal kind of thing, which we talked about fee and flows kind of number. And the idea was to strengthen the core fee income. See, the recovery of written-off other than the normalized run rate can be one-off at some point of time. Treasury income is also highly dependent on the market condition. So the core income, if you look at the core fee income this quarter, the growth is 12.6% and that is where we want to optimize that. There are challenges in terms of because some of the core fee income going like moment you go for a normal physical transaction to a digital transaction on the fee goes off, but there are challenges to optimize, but clearly as a management, as a bank, we are clearly focused how to optimize on the core fee income. So this quarter the co-fee income living apart the treasury income or the tax refund interest, the tax refund, the core also has gone up by 12.6%. That’s something significant.
See, the numbers that looking at, the book increase is almost 12,18%. The operating profit increase is almost 9.9439%. Operating expenses is content at 9 points something. So I think somewhere we have to have a stability of all this income and that is what actually we have — if you look at the co-fee income this quarter, the growth has been good, but we’ll be trying to focus more on that and try to optimize more also going forward.
Unidentified Participant
Thanks, sir. Thanks. Many thanks. All the best, sir.
Debadatta Chand
Thank you very much.
Operator
Thank you. The next question is from Piran Engineer.
Unidentified Participant
Yeah. Hello. Congratulations, sir, on the quarter. Just firstly, on the previous question, a clarification, this INR300 crore INR350 crore lower interest income. If we adjust for that, our margins would be about 10 bps higher. Is that a correct understanding?
Debadatta Chand
It is actually — last time as I said there was one account which was a one-off in terms of the recovery of NCLT resolution. And significantly the recovery was full in that case putting a positive interest income impact of roughly around INR300 crore INR350 crore. So there is a normalized what — that is what we said that what is the delta that changed last quarter vis-a-vis this quarter and that is about INR350 crores. And thank you very much for congratulating the bank. The bank would again try to have one, I said initially to have a stable, sustainable kind of a growth both in terms of book and also in terms of the profit number. Thank you very much for that.
Unidentified Participant
No, no problem, my pleasure. So sir, just one or two more questions. Firstly, on our borrowings. In the last two quarters, it’s gone up from roughly INR90,000 crores to now INR1.3 lakh crores. Can you just help us as to what are these borrowings? Are they more refinanced NABARD should be because we are growing on MSME or are there more infra bonds? And ballpark, what would be the cost of these borrowings? Of the entire borrowing book?
Debadatta Chand
Yeah. Actually, you said all of that actually part of the borrowing and clearly the borrowing is to substitute on the deposit cost otherwise, right? So Mr. Tyagi can I just slightly update more on this or —
Lalit Tyagi
Yeah. So thank you very much, sir. So in fact, last quarter, we raised infra bond to the extent of INR5,000 crores. Put together this financial year, we have raised infra bond to the extent of INR15,000 crores. And we also tapped time-to-time the competitive refi from some of the domestic specialized distributions. Put together that and the market borrowings have elevated, as MD said that when that option is available and cheaper and all of us know that deposit side, there are some limitations in terms of managing the cost. So we balance it out with that.
Unidentified Participant
Understood. Understood. And sir, just lastly on gold loans, there is a lot of talk about agri gold loans below 2 lakhs should actually be collateral free and not — you can’t take gold from the farmer. So can you just probably clarify these rumors that are whatever this news that is going around as to whether this is what the RBI wants collateral free up to INR2 lakhs. And also in regular consumer gold loans, a lot of talk about refinancing at the end of it, doing EMI payment, 75% LTV throughout the loan rather than at disbursements. So maybe if you can just share some light on what is — what’s the RBI thinking and what is the conclusion? That would be very helpful.
Debadatta Chand
See, as long as it’s not a guidelines normally difficult to comment on that. Actually, there are metals which are again not crystallized, so we have not framed stance on the matter, but, Lal Singh sir, have anything you want to update on this. On the gold loan side, agri gold?
Lal Singh
Thank you, sir. In fact, with agri gold there is no such guideline till date. But yes, on MSME, there is guideline that up to INR10 lakhs, we can’t take any collateral that is — that may be land building or gold, whatever is there. So those we are adoring to.
Debadatta Chand
On the retail gold loan, you have some question right. So what is that?
Unidentified Participant
Basically, RBI has expressed some concerns on things like bullet repayment on maintaining LTV of 75% throughout the term of the loan and there was a meeting of the gold lenders association with RBI a couple of weeks back. So some updates, even qualitative is fine, but some updates would be useful, sir.
Debadatta Chand
No, actually, as far as the retail gold, my book is almost hardly INR6,000 crores. So it’s not a very significant amount there, right? But then some of the conversation we are not aware as on today, but our business is a compliant business as of today. Mudaliar sir, have anything you want to add on this?
Sanjay Mudaliar
No, sir. In fact since the details are not available, I don’t think it will be appropriate to give any comment at this stage. Thank you.
Unidentified Participant
Okay. Fair enough. Thank you. Fair enough. Thank you, sir. And wish you all the best.
Debadatta Chand
Thank you very much once again.
Operator
Next question is from Mahrukh Adajania.
Unidentified Participant
Hello?
Operator
Yes, Mahrukh.
Debadatta Chand
Yes, Mahrukh. Please go ahead.
Unidentified Participant
Hi, hello, sir. Good evening. I had two questions. Actually three questions. Basically, firstly, on your credit cost, right? So you had explained that you had made higher specific provisions last quarter and a floating provision of billion and that’s why we understand that this quarter the credit costs are lower, but they are at 38 basis points. So is this a new normal now or where do you see your credit cost settle in the net in fourth quarter or maybe over the next three to four quarters? What should we build in like 40 basis points, 35 what is the number? That’s my first question and I’ll —
Debadatta Chand
Okay. Let me reply first to your one. There is not any new normal. The only normal is that the credit cost would be below 0.75, right? So that is point one. Point two is a case wherein, yes, the credit cost is also linked with the asset quality. And as of today, when we look into the SMA book, the stress book, we are quite comfortable as of today with regard to the asset quality. So in that scenario, I don’t think anything like nine months credit cost is 0.47, right? So maybe a band between 0.5% to 0.75% would like to end in the full-year. But again, it all depends upon the forward, what you can say emerging facts and figures that would come to us, but then the full-year it will be below 0.75 that is what fully we are convinced on the piece, right?
Unidentified Participant
Okay, sir. Sir, my next question is on home loans. Obviously, your home loans are growing well. They have grown 4% quarter-on-quarter. But if you see some private banks, they are not being able to deliver growth of four — very few are delivering even 3% Q-o-Q. So is it that you are getting a lot of refinancing requests from private banks? What is your rate to the most prime customer that you offer?
Debadatta Chand
See, there is no — actually the numbers that you have given is the organic book. So there is no refinancing or anything from private banks on that matter. The numbers that we see is 20% or 19.5% on the home loan 16.6% is the organic growth. It’s not like this quarter we have a growth of 16.6%, right? Consistent for Bank of Baroda, particularly in the segment of home loans, we do have the right delivery channels on the right relationship measures, the right project approval. So that giving us a bit of a positive outcome for many quarters. So continue to grow therein, I don’t think there are elements which again can slightly put the guidance below what we are growing, but we’re quite comfortable with the growth both in terms of asset quality.
In terms of the best, they are all card rate being defined in the website. Our — I mean the bias is obviously are I mean borrower is having a better cibil score. So that’s on the asset quality we’re quite mindful in terms of what is that book we built. In terms of rather actually one data we didn’t share, the RWA density that we compute for many of the products, including home loan is showing a positive outcome. So in that way, we believe in good quality borrower. We believe in the right relationship manager. Actually, one of the important factor in the home loan segment is the time you take to give a sanction, right? So that is what actually we improved significantly in our last many years. So I think there’s a sustainable growth that we maintain. And on the quality side, which is a — on much better side, actually, there is no concern as of today.
Unidentified Participant
But your best borrower would be getting at 8.5%, 8.40%, what would be the rate?
Debadatta Chand
These are all card rate, ma’am. Actually the card rate is defined in the website.
Unidentified Participant
All right. Okay, sir. Sir, my last question is just one clarification that you did say that your recovery income that goes into interest on loans, it goes there, right, has come down, though the Q-o-Q growth in loans and interest on loans is matching, but okay, it’s gone down from say around INR830 crores to around INR500 crores, INR550 crores. That’s correct, right?
Debadatta Chand
No, I just update you actually the conversation we had actually our normalized recovery out of written-off accounts is almost INR750 crore to INR800 crore. What had happened last quarter, there was a one-off in that recovery of written-off accounts. And because in that particular recovery or the recovery was substantial that we could recover the full amount, the positive impact because of that particular one-off is roughly around INR300 crores, INR350 crores on the interest income, which is not available this quarter, right?
Unidentified Participant
Got it.
Debadatta Chand
So otherwise normal is going to be INR750 crore INR800 crores that we’re going to have for future quarters also.
Unidentified Participant
Right. So the normalized reversal or the normalized accretion to interest income will also be then what happened this quarter only, right?
Debadatta Chand
No, that cannot be quantified. Actually, Mahrukh, that cannot be quantified the reason being many of the recovery may not — you are not recovering the full amount to get benefit of the interest reversal, right? You may recover your principal out-of-the recovery. But last quarter there was a one-off case where the recovery was full that included the reversal of the interest income and also the full extent of the principal. So the delta that we made last quarter, that was the point of discussion, not on a normalized, it may give some reversal of the interest income, we may not give any reversal of the interest income.
Unidentified Participant
Got it. Very helpful. Thanks a lot, sir. Thank you.
Debadatta Chand
Thank you.
Lal Singh
Thank you, Mahrukh.
Operator
Next question is from Kunal Shah.
Debadatta Chand
Yeah, Kunal, good evening.
Unidentified Participant
Yeah, good evening. Can you hear me?
Debadatta Chand
Yeah, I can hear you.
Unidentified Participant
Yeah. So a couple of questions. Firstly on the international slippages and international margins, so again, this quarter we saw a decline last time you indicated it can still be managed at 1.9% to 2 odd percent. And giving — given the global rate environment, do we see pressure over there. So or is it on account of maybe the slippage in the — it’s a small number, but still like INR200 crores slippage which is leading to a lower NIM in the international market.
Debadatta Chand
See, one in the slippage, another is the margin. The margin is stable actually if you look at the nine months margin on international, it is 2.02. And this quarter it’s at 1.8 slightly — when the reset of pricing happens in the international book, both on the advance and also on the deposit, there is a lag clearly. So a lot of refi transaction happen on the asset side, which again are not passed on to the action of the deposit. But broadly our — the NIM on the international would be 1.9 to INR2, that is what we’re hopeful going forward we can maintain.
On the slippage particularly that you talked about all the very small amount of INR200 crore. Tyagi sir, can you just update on the slippage side?
Lalit Tyagi
So actually this was one of the cases in our one of the territories. And probably it is not the normalized degradation rate in international book. In fact, for the many quarters, international book has not shown any distress. So at individual asset cases, sometimes these emerges. But this is not the normal case for the international book.
Debadatta Chand
In fact, it’s a very combination of many of the small accounts, which again based on some accounting change, we made that NPA, but over the last many quarters, it’s a very fairly stable asset quality as far as the book is concerned.
Unidentified Participant
And secondly, again, maybe someone asked with respect to the personal loan growing at 7% quarter-on-quarter. Most of the players we have seen there is a slowdown, which has happened. But I think for us, it is still continuing to be faster pace and there is a rising NPL on this growing book. So wouldn’t we be slightly cautious or conservative in this segment and any risk that we see.
Debadatta Chand
Kunal, you are right on that. Actually if you look at my base is very low, INR32 odd thousand crore in personal loan as compared to, and out of that maybe 50% is the non-digital personal loan than the digital personal loan. The point you are referring on the digital personal loan, right? So that book is almost INR1213,000 crores, not a big amount there, right? The earlier the growth in this segment was almost 80%, 100% quarter-to-quarter, right, actually, I mean quarter-to-quarter on a Y-o-Y basis. And like in July 2023, when the market was not discussing, we started talking about moderating this growth. So from almost 80% to 100% Y-o-Y in 1.5 year times, we have come back to 24%.
A couple of measures that we have undertaking during the process is to completely change the underwriting model based on a much state-of-art bureau model now. At the same time, some of the segment which has given a slightly elevated slippage, we completely stopped those segment. So the book is fairly balanced. We are comfortable growing at 24% or 30% or 35%, maintaining the asset quality. In terms of the incremental slippage that you may be talking about in this quarter, it’s a INR100 crore on a slippage of INR2,500 crore for the quarter. So it’s not anyway significant. You get at like unsecured personal loan is something that you need the market is growing in that segment. You want a bit of margin is quite high. So you can’t put everything on the same EA, but I don’t know other banks, but we are quite comfortable at 25% 30% growth because the underwriting quality is much better as compared to what we had in the past because of the model part of it.
Anything, Mudaliar sir would want to add further on this?
Sanjay Mudaliar
Only one additional point I will give it is, we are now moving towards more of the salaried class account where we are going into the personal loan. So that gives us some additional comfort on this one.
Unidentified Participant
Fair. Okay. Okay. Got it. And last question on employee provisions. So this quarter the run rate has been high. Is it more to do with the interest or discount rate assumption or maybe now — and maybe if the rates decline, would we see a relatively higher provisioning requirement or we have already factored that in because that’s going up to almost like closer to INR1,150 odd crores for this quarter.
Debadatta Chand
You are right, actually we are slightly adequately covered in the segment with regard to the discount rate that you are referring. And so we are quite — I mean that way adequately provided on the matter. Anything CFO, I would like to add here?
Manoj Chayani
Yes, sir. So Kunal, as you know, there is a movement that in case of the gratuity, it has moved from 6.99 to 7.05 and also the form size requirement is there. So as a result of that, there is a — the increase in this provision amount. But we are prudent in taking the provision, all the provisions as required has been provided till that.
Operator
Next question is from Mundra.
Unidentified Participant
Hi, good evening, sir. Thanks for the opportunity.
Debadatta Chand
Good evening. Please go ahead, sir.
Unidentified Participant
Sir, few questions, sir. First on — if I look at your interest on advances, right, only the gross interest on advances, that has gone up by 9.7% Y-o-Y in this quarter versus 11.8% growth in advances, right? So we are in at least we would have increased the MCLR, we are doing more PL, less corporate, asset quality has been holding up. So why is that the interest on advances growth is lower than the loan growth?
Debadatta Chand
Okay. And let me respond to that actually rather that’s very positive that the book increase is 11.8% and the interest income increase is almost 9.7%. See, on stance that would have seen that we are also at the meantime building the quality of the book, right? So the quality of book covers with regard to — as we discussed on the previous, can we reduce the personal loan growth? Even though the margin in personal loan is very high. Similarly, a segment where there is a bit of elevated stress therein, you would have seen my NBFC book has gone down as a percentage and the Y-o-Y growth is very less because this is induced by the regulatory norms that came in.
So it’s a balance in terms of how do you again put the income growth at the same time create the underwriting quality. And earlier also we said for us the underwriting quality is one of the main building blocks while creating the book. So in that way, I’m quite happy that the growth is both balancing out in the 11.7% and 9.6%. So going forward, I mean, depending upon the interest outlook, there may be changes on the pricing of the loan asset and then we’ll map it out accordingly what is the percentage increase there will be.
Anything, madam Beena, I would like to comment on the planning perspective on the income growth in advances. You’re mute, ma’am. Okay, fair.
Unidentified Participant
Okay. Secondly, sir, on your margins, right? So I heard your commentary, if I were to adjust for the 350 odd additional recovery that we had in second quarter, right? So then the margins in second quarter would have been 3% and that has now come down to 2.94%. So would you believe considering your emphasis on quality and still tight liquidity, the trend maybe should be similar, right? I mean, Q4 margins can actually be lower by a similar adjusted number, 5 basis points, 10 basis points lower, could that be a fair assumption?
Debadatta Chand
See, my nine months NIM is 3.08, so one factor again I said during commentary that the panel interest and panel income, the impact is almost 5 bps, 6 bps negative, right? So otherwise the — it would have been 3.13 or 3.14. It’s on the written-off of the recovery out of written-off exactly it depends on the recovery that happens, how much you are recovering. If you’re able to recover higher than the principal, obviously, there could be interest component, it will go to the interest income. So there was some one-up on that. So that positively attributed.
But at the same time, let us also look at the deposit cost, which is again being elevated across the system. On the rather on the margin cut that you have taken is much lower as compared to many of the industry that we have seen. So it’s a balance call. You would have seen that there is a corporate loan growth slightly lower as compared to what we did in September. And typically, while providing full money towards the capex, the term loan segment, a lot of refi transaction that happens, lot of takeover transaction that happen, which is again at a very fine price, obviously high quality asset and there again slightly we tried to grow lower as compared to the last quarter.
So these are all calibrating call in terms of how do you manage it, but the full-year guidance that on the margin side, we said at 3.05 plus minus 5 bps and that means 3% to 3.10% for the full-year, I’m talking about Q4 can be any number that you can estimate, but the full-year would be to 3.0 with an upside bias. Why the upside bias is that a couple of factors that we are anticipating that the market to happen, particularly and there is an improvement of liquidity that is happening because the regulator — the RB injected durable liquidity now. If there is an expectation of a rate stance change or got happening in policy.
So our market borrowing side, that is also a significant amount undergo a change because that can reset quickly on that. Typically, the CD book that we’re carrying almost can reset in no time. A lot of other deposit also there are maturing deposit happening before March. So based on that, we anticipate that full-year guidance will be keeping somewhere between 3 to 3.1. Whatever made the scenario going forward on the rate front.
Unidentified Participant
So sir, you are saying this is assuming some rate action also, right? Even if there is a rate, you will hold on to this more or less the guidance, right?
Debadatta Chand
The upside, that is what I said, ideally, otherwise you can take the median number at 3.05, right, for the full-year. But I can still optimize to 3.10 if some of the assumption comes true for us, right, in that way.
Operator
Thank you, sir. The last question for this evening, we’ll take it from Nitin Agarwal.
Unidentified Participant
Hi, thanks for the opportunity. Sir, I have a question around your business growth, while you have reported a similar growth in advances and deposits and that’s something we appreciate. But at the same time, bulk deposit mix has also gone up during the year. So what will be any particular threshold that you will look to maintain because as you go forward, the requirement of deposits will remain as is to support the loan growth and CD ratios are already elevated. So any particular level of bulk deposit beyond which you would not want to venture in?
Debadatta Chand
Sure. We said earlier multiple quarters, the dependency in the bulk has to go down. Actually, if you look at Bank of Baroda, the earlier quarters, there was a high amount of dependency with service bill deposit. We said very now almost six, seven quarters we are saying the dependency has to go down. On the dependency, it doesn’t mean that the outstanding would go down for every time. Although we reduced the outstanding consistently for many quarters, this quarter slightly increased. The slight increase vis-a-vis the normal growth of deposit of, let’s say, 11.8%, this 14% visa vis-a-vis 11.8% is precisely for two reasons.
We are able to grow CASA higher than many of the peer system, right? I mean, last quarter CASA grow 7% and this quarter is 6.5%. But also at the same time, the retail term deposit also were able to grow at 9.5%, 9.6%. That is allowing us slightly on a mix to grow slightly higher on the deposit keeping on there is a liquidity constraint in the market, right? So in that way, the stance continue to be lowering the dependency. But if there is a requirement where you can optimize on the both side or in there is a requirement to give a certain resource mobilization, then we’ll keep on raising on the bulk deposit. The number that you’re looking at INR2,24,000, there is almost 25%, 28% component of certificate of deposit there.
And the certificate of deposit, as you know for a certain term at a much lower than the wholesale deposit rate. And in case there is a hypothetically thinking a cut happening, this market would react very fast to that. So in that way, balance out, it’s a combination of many strategy in terms of how do you optimize on the cost or the stance continue to be a lower dependency on the bill deposit. That means this as a percentage of total deposits not go up either for many quarters actually significantly have reduced, although we have not disclosed to the market or number, but we said we reduce the dependency in the bulk deposit and then continue to be the same stance for the future quarter.
Unidentified Participant
Right, sir. And sir, the second question is on the retail G&P because if I look at the segmental G&P, retail is one space wherein the GNPAs have gone up over last one year pretty sharply. And within that specifically the personal loan wherein on a book which is growing well, the G&P ratios have been inching up. So how do you look at that and how long will you think the stress will continue, especially in the personal loan book there?
Debadatta Chand
The personal loan, see, the GNPA personal loan December was September, the growth is it has gone 3.16, I believe it has gone to 3.9 kind of under that. In terms of the absolute number, this is roughly around first slippage of INR100 crores, right? And my normalized slippage amount is roughly around INR2,500 crores. That’s not significant for me. Mainly, again, retail, we — one and a half year we improve the underwriting quality, but then there are leasing book there. This book is a small book. Actually my outstanding is INR30 odd 1,000 crore.
On the incremental slippage that you are talking about is much lower and the retail GNPA is going down. Like other component of the GNPA, the — I mean the elevated slippage is not there. So it’s much more manageable. This is a segment where it’s a NIM accretive, gives a good margin, there is a requirement, people look for a bundled product rather with a secured loan along with unsecured loan. So we will grow at, 24% 25%, 30% kind of a level and quite comfortable growing at that level and not going to put any stress in terms of slippage, particularly on the unsecured personnel loan.
So on a planning perspective, but I mean, anything or to comment on the retail personal loan on this
Beena Vaheed
With regard to the retail personnel loans, we have been going quite slow. The growth this year has been — though it has been 7%, we are more or less going with salaried class advances. And we are not looking at the other advances as we looked in the previous years. So our focus would continue to be on the salaried class personal loans, not that we would de-grow, but focus would be more on the salaried class and we would continue to grow, but with regard to the best of advances.
Unidentified Participant
Yeah. Okay. Got it. Thanks, all. I wish you all the best.
Debadatta Chand
Thank you very much. Thank you.
Operator
That’s the last question we’ll be able to take today. Can I request Manoj Khani, sir to please give the vote of thanks.
Manoj Chayani
So as we conclude today’s analyst meet, I would take a moment to express our sincere gratitude to all of you for your time and participation. We are thankful to each of our analysts for their valuable contributions and their feedback, which will help this organization to grow in a longer way. Your continued support, engagement mean a lot to us and we look forward to have a stronger bond with you. If there is any worry, any clarification required in future also, you can contact me or our investor team, airport, anytime you feel like to get it clarified. Let’s have a stronger bond with each other to have a stronger organization. Thank you for your participation.
Debadatta Chand
So thank you very much all analysts on the call. Thank you very much.
Operator
Thank you.